Mesra Departmental store is located in Bandar Baru Nilai. The departmental store sells various products ranging from children clothes and toys to homsehold goods. The forecast information for the coming year on the various department in the store is as follows: a. There is a proposal from the management to closedown the household department due to its profitability that is declining year by year. Advise whether this action should be taken. (Discussion should include the impact to the departmental store profit) b. The manager of the departmental store feels that the Household department should be replaced with the sports accessories department as the department store is located nearby colleges and universities. Therefore market for this type of goods is wider. The assistant manager of the departmental store has provided the cost and revenues for the sports accessories department for the coming year if it is set up. No additional fixed cost would be incurred. Should the household department be replaced with the sports accessories department? White Berhad produces four different products. Estimates of sales, production and cost for the coming year are as follows: The production manager is expecting either one of the following situation to arise: i. Restriction of foreign labour by the government into local market resulting in labour hour constraint of 15000 hours. ii. Shortage of raw material supply in the local market resulting in only 12,000 kilos of raw material been made available for production. Required: i. Assuming situation 1 arises, whereby the company faces a shortage of labour prepare the following: a. Sequence in which the products should be produced in order to maximize profits. b. The number of products of each type to be produced and amount of profit that would be lost due to the constraint. ii. Assuming situation 2 arises, whereby the company faces a shortage of raw materials prepare the following: a. Sequence in which the products should be produced in order to maximize profits. b. The number of products of each type to be produced and amount of profit Company ZEE is currently producing and selling four products W,X,Y and Z. All this four products goes through the same production process during the course of manufacture. The cost structure and selling price for each product are as follows: The production manager is expecting a shortage of workers in the coming period. He has estimated that 76 there would only be 20,000 direct labour hours in total available for all the four products. The direct labour are paid $2 per hour. The sales manager is expecting the sales of the four products to be as follows in the coming period: W-5000 units X4000 units Y3000 units Z6000 units Required : i. Calculate the contribution per limiting factor for each product and rank the products in the order in which it should be produced and sold to achieve contribution. ii. Prepare a production and sales schedule in accordance with your answer in (i) above. iii. Compute the contribution that is lost by the restriction placed upon the production process by the limiting factor. iv. Suggest any two alternatives to overcome the limiting factor problem in Company ZEE. A Company makes three products in a single facility. Data concerning these products are as follows: The machines for mixing are potentially the constraint in the production facility. A total of 24,500 minutes are available per month on these machines. Direct labor is a variable cost in this company. Required: a. How many minutes of the mixing machine time would be required to satisfy demand for all three products? b. Calculate the contribution of each product. c. How much of each product should be produced to maximize net operating income (Round off to the nearest whole unit) and compute the total contribution of the factory. Showing clearly, the total contribution of each product. d. Compute the amount of profit that would be lost due to the constraint posed by the mixing machine. f. Suggest TWO (2) alternatives to overcome the constraint faced. Mr. Ali accountant for Nilai Stores has prepared the following departmental income data: The following additional information is available: 1. The factory rent of $1,500 assigned to Department C is avoidable if the department were dropped. 2. The company's total depreciation would not be affected by closing down department C. 3. Eliminating Department C will reduce the monthly utility bill from $1,500 to $800. 4. All supervisors' salaries are avoidable. 5. If Department C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,100. 6. Elimination of Department C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000. Required: i. Prepare an analysis showing whether Department C should be eliminated. ii. The general manager has suggested that if department C is closed down it could be rented out for $1500. Would your decision in (i) above change iii. Explain the term sunk cost with an example